Financial literacy has always been a personal interest of mine. I am sure that you have heard of a person of modest means who turns out to be very wealthy, or someone with a very high income that is constantly in debt with no retirement savings. I have always been fascinated with how different people approach finances, so I was quite interested in the recently published “Global Financial Literacy Survey” by Standard & Poor’s Ratings Services.
This survey asks just 5 questions covering four financial concepts: debt, risk, inflation, and savings, and compiled data from more than 150,000 adults in 148 countries. The goal was to create a measurement of global financial literacy. The results are interesting. “Financially literate” as this survey defines, is correctly answering 3 out of 5 questions.
I want to share just a few key points. According to the survey, 57% of adults in the United States are financially literate. Of the 4 topic areas, the concept of interest seems to be the most challenging and least understood. For example, just 58% of adults who save at a financial institution correctly answered the interest question.